NEW YORK (MainStreet) -- I didn't expect to return to the subject of Ron Paul so quickly, but there's been something in the air in recent days, as word has circulated in the media about the racist and anti-Semitic content of the newsletters that went out in his name years ago.

It's a vague burning smell. It's the smell of Ron Paul's Teflon going up in smoke.

His extremism, and the bigotry of the newsletters that went out under his name, are beginning to stick. Sure, he's likely to do well in Iowa and go on to become

President Obama's best friend

in the 2012 campaign, as I pointed out last week. That hasn't changed. What's been exposed is a central facet of Paul's appeal -- the sheer craziness and ugliness of both the candidate and his supporters.

Whatever one thinks of Obama (and I've been critical), it can't be denied that he appeals to the best instincts of Americans. Paul appeals to the worst instincts of Americans: their fears, their paranoia, their bigotry. You can get a sense of that by reading the ranting and raving of his supporters on the Internet. Such as, for instance, a comment that was posted to

this item

in my blog the other day. (See the comment from "Thoth.")

You'd be hard-pressed to find a Mitt Romney, Newt Gingrich or Rick Perry supporter who'd suggest that Jews (or blacks, or any other ethnic group) have the most to lose from a victory by their candidate. As Nouriel Roubini pointed out in his

Twitter feed

on Tuesday, "Ron Paul: appealing to black helicopter paranoids, white supremacists, gold standard freaks, laissez faire wackos, antisemites and racists."

Now, I know that Paul's defenders are going to say, as he has, that he is not responsible for the views expressed by his supporters. That is true, but he could easily disavow the support of people who express loathsome sentiments. He could say, "If they feel that way, I don't want their support." But he hasn't said that, and I think that's because he does not want to alienate a vocal and intensely devoted subset of his followers.

Until recently, the media has been

giving Paul a free ride

, so little attention has been focused on the "crackpot factor." It's not sufficiently appreciated that Paul exploits the paranoia strain in American politics, which was famously explored in Richard Hofstadter's seminal

1964 study of the Goldwater campaign

. Paranoia, you see, is not the exclusive province of Third World politicians. We've got plenty of it right here in the good old U.S.A.

Since paranoia is an essential part of his appeal, Paul has been careful to

not disavow the support

of his racist, anti-Semitic and conspiracist supporters.

They're as much a part of his core constituency as the libertarians who like his economic ideas and the progressives who favor his anti-war stance. But all those non-bigoted, non-paranoid Paul supporters have to accept the fact that we're seeing a deliberate campaign strategy being employed here, pandering to the views of the lunatic fringe of American politics, much as Richard Nixon's "southern strategy" in 1968 appealed to white racists.

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Nixon was a scheming cynic, but there's no doubt that Paul is sincere. He doesn't flip-flop. He doesn't mind taking unpopular positions. He's unafraid to suggest, for instance, that the Civil Rights Act of 1964 was a bad idea, and that Lincoln could have avoided the Civil War by

buying up all the slaves.

The sincere extremism of Paul's views became ever more evident over the weekend, with a blog post by a former Paul congressional aide named Eric Dondero. You can read it


in full. This is devastating stuff, and the Paul campaign is apoplectic as it begins to go viral. The Paul campaign responded to Dondero's revelations by

smearing him


Paul's supporters fired back in typical fashion, with an "Eric Dondero is slime"

Facebook group.

Actually, his revelations have the ring of truth. Dondero, who has worked for Paul on and off since 1987, is quick to defend Paul from the charge that he is a racist or anti-Semite. "I never heard a racist word expressed towards Blacks or Jews come out of his mouth. Not once. And understand, I was his close personal assistant." That is believable, and so is this:

* Paul "is completely clueless when it comes to Hispanic and Black culture, particularly Mexican-American culture. And he is most certainly intolerant of Spanish and those who speak strictly Spanish in his presence."

* Paul "wishes the Israeli state did not exist at all. He expressed this to me numerous times in our private conversations. His view is that Israel is more trouble than it is worth, specifically to the America taxpayer. He sides with the Palestinians, and supports their calls for the abolishment of the Jewish state, and the return of Israel, all of it, to the Arabs."

* Paul "told me very clearly, that although he liked

an openly gay supporter, he did not wish to use his bathroom facilities."

* Paul is an isolationist and "strenuously does not believe the United States had any business getting involved in fighting Hitler in WWII. He expressed to me countless times, that 'saving the Jews,' was absolutely none of our business. When pressed, he often times brings up conspiracy theories like FDR knew about the attacks of Pearl Harbor weeks before hand, or that WWII was just 'blowback,' for Woodrow Wilson's foreign policy errors, and such.

*Paul "engaged in conspiracy theories including perhaps the

Sept. 11 attacks were coordinated with the CIA, and that the Bush administration might have known about the attacks ahead of time. He expressed no sympathies whatsoever for those who died on 9/11, and pretty much forbade us staffers from engaging in any sort of memorial expressions."

In other words, the reason for Paul's appeal to crackpots is that he is one of them.

Imagine that: A crackpot has a shot at being president. That's really remarkable, when you think about it. The other Republican candidates for president are almost as extreme in their views; their personal styles range from goofy to sociopathic. But they seem reasonably well-balanced. They aren't crazy.

It's been said that people get the kind of elected officials they deserve. Now, I know that this country has done a lot of things we regret -- slavery, exterminating Indians, invading Iraq. But what have we ever done to deserve Ron Paul?

Gary Weiss's forthcoming book, AYN RAND NATION: The Hidden Struggle for America's Soul, will be published by St. Martin's Press on February 28, 2012. Follow him on Twitter: @gary_weiss.

Gary Weiss has covered Wall Street wrongdoing for almost a quarter century. His coverage of stock fraud at BusinessWeek won many awards, and included a cover story, �The Mob on Wall Street,� which exposed mob infiltration of brokerages. He uncovered the Salomon Brothers bond-trading scandal, and wrote extensively on the dangers posed by hedge funds, Internet fraud and out-of-control leverage. He was a contributing editor at Conde Nast Porfolio, writing about the people most intimately involved in the financial crisis, from Timothy Geithner to Bernard Madoff. His book "Born to Steal" (Warner Books: 2003), described the Mafia's takeover of brokerage houses in the 1990s. "Wall Street Versus America" (Portfolio: 2006) was an account of investor rip-offs. He blogs at